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Tuesday, April 28th, 2015


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What’s a Credit Score Anyway?

How much do you know about your credit score? That three-digit number on your credit report is tied inseparably to your past, present, and future financial life. It can play a role in your ability to rent an apartment, qualify for a loan, or even get a job. It also affects how much you’ll pay for interest charges, insurance, and even cell phone contracts.

WHO’S WATCHING YOUR SCORE?

1. Lenders.
Having a good rating can help you qualify for the best rates on a car loan, credit card, and even a small business loan if you’ve got entrepreneurial spirit.  A poor score can make it impossible for you to qualify for a loan or credit card.

2. Landlords.
Increasingly, you may need a good credit score to rent an apartment.  Landlords view your credit rating as a measure of your responsibility to pay bills on time.  If your rating is below par or you don’t have a credit score yet, you may have to find a friend or relative to co-sign your lease, or you could be required to pay a higher rent or security deposit.

3. Employers.
When you apply for a job, potential employers can pull your credit report as long as they notify you first.  And, in fact, about 35 percent do, according to the Society for Human Resource Management.  Bad credit can be a signal of irresponsibility, or employers might be worried you’ll spend more time fretting about your financial woes than concentrating on your job.

4. Cell Phone Carriers.
Even cell phone service providers may check your credit before signing you up for a plan.  They want to make sure you’re responsible and will pay your bill each month.  Some utility providers may pull your report as well.  If you have credit issues, you may not qualify for the best plan rates, you could be required to pay a deposit, or you could be turned down.

HOW TO BUILD YOUR SCORE?

IF YOU’RE IN COLLEGE, get one credit card during your junior or senior year, use it occasionally, and pay off the balance each month.

IF YOU’RE ALREADY OUT OF SCHOOL, or you don’t trust yourself with a full-fledged credit card yet, get a secured card.  This card allows you to make a deposit with a lender (such as your bank or credit union), and the amount usually becomes your credit limit.  Most require a deposit of $300 to $5,000.

Tip: Credit scores range from 340 to 850.  The higher your score the better.

HOW TO GET YOUR SCORE?

YOU CAN ORDER YOUR CREDIT REPORT FOR FREE EACH YEAR AT ANNUALCREDITREPORT.COM.  This Web site, created by federal law, allows you to request for free a credit report from each of the three credit bureaus once every 12 months.

Although you can get your credit report for free, you’ll still have to pay to get your credit score.  You can order your score for about $16 at myfico.com or the three credit bureau WEB SITES:  EXPERIAN.COM, TRANSUNION.COM, AND EQUIFAX.COM.

Tip:  Don’t be fooled by other sites that misspell annualcreditreport.com or use terms like “free credit report,” or “free credit monitoring.”  They actually are not free and may send you to other sites that try to sell you something or collect your personal information.

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